How Daily Harvest CEO Rachel Drori landed investors like Serena Williams

Frozen food doesn't have to taste like it.

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Rachel Drori, founder and CEO of Daily Harvest, the online meal delivery service that sells frozen smoothies, bowls and soups, started her own food business when she couldn't find any healthy frozen options at the grocery store.

So she created her own defrostable meals, starting with smoothies made with organic fruits and vegetables like dragonfruit and acerola cherries, and expanded to lattes, soups and meals like the cauliflower, spinach, basil and cashew harvest bowl.

The superfood delivery service has raised $43 million over three rounds of funding, and has attracted a star-studded line up of investors including Serena Williams, Gwyneth Paltrow, Shaun White and Bobby Flay.

Last year, frozen foods were incorporated into 9.8 billion meals at home, up 2 percent from a decade ago, according to data from market research firm NPD Group. And 80 percent of meals and snacks occur at home, another growth driver for the frozen foods market, according to the same report.

FOX Business spoke with Drori about how much she saved up to start Daily Harvest, the challenges she faced raising money, and how she locked in big name investors like Serena Williams.

FOX Business: How much of your own money did you have to save up to start Daily Harvest?

Drori: I always knew I wanted to be an entrepreneur. In elementary school, I founded a few small “empires” - think lemonade and friendship bracelets. I used the proceeds from these ventures and saved up money from birthdays and summer jobs, knowing that one day it would go toward creating something. I invested my savings over time in various stocks (brands that I loved) and by the time I was ready to take the plunge with Daily Harvest, I had about $25k saved up.

I was able to use this money to make my first moves, but because I had worked so hard to save it, I was incredibly scrappy. I have always believed in capital efficiency and still operate the business with a measured approach, but was especially disciplined during the first year. I was the only team member; I built the website, made the food, and hand-delivered everything from my car. This allowed me to stretch the funds and get Daily Harvest off the ground.

Rachel Drori, the Founder & CEO of Daily Harvest.

FOX Business: What are the biggest challenges of scaling your business?

Drori: The biggest challenge for me was building out the logistics and supply chain. We meticulously source our produce and work directly with farms to ensure that every fruit, vegetable, leaf and legume is as good as we can grow it. We are also adamant that our produce is picked at peak ripeness and then frozen on the farm within 24 hours of being harvested to retain nutrients and lock in flavor. This was very tricky in the beginning before we had scale so it meant building strong relationships with our farmers and building the infrastructure for supply alongside them.

FOX Business: What was your biggest money mistake? What did you learn from it?

Drori: To launch the business on the West Coast, we sent frozen trucks across the country with thousands of pounds of food only to get a call two days later that the freezer on the truck had died. We were moving a million miles a minute, and I trusted this quick solution without doing the research. We ended up having to ship everything overnight from the East Coast to fulfill our orders, and I won’t even tell you how expensive that was. I learned that it’s okay to make mistakes -- you have to in order to move fast -- as long as you fail fast and optimize quickly so they never happen again.

FOX Business: Female founders get less funding than men, but make double the revenue, studies show. Was fundraising particularly challenging in your experience?

Drori: Fundraising was very challenging, especially since I was 9-months pregnant during my Series B. I heard everything from, “how do you plan to be a good mom and run a good business?” to “can you send these to my wife to try?” Dumbfounded, I quickly realized that I had to prove objectively that the business had all of the markers of success and remove any space for subjectivity. It is disappointing that women have such a hard time fundraising. We make over 80% of consumer purchasing decisions. This disparity has led to generations of men creating products and services they think women want or need that often miss the mark.

FOX Business: How did you pitch big names like Serena Williams?

Drori: Serena Williams was actually a fan of Daily Harvest and approached me to invest because she believed in the business. In the end, I was lucky because I found an incredible group of partners including Serena, M13, VMG, LSVP and more.

FOX Business: What was your first job, what did you learn?

Drori: When I graduated from college I had a lot of ideas and things I wanted to achieve. I knew at some point I wanted to create a brand - I was fascinated by the concept. I believed that building a brand was about more than pretty pictures and clever words, but wanted to get my hands dirty, learn from the best and confirm my theory.

I started my career at Four Seasons Hotels & Resorts and what I took away from my experience has been foundational to the way I’ve built Daily Harvest.  “Brand,” “hospitality” and “customer centricity” are all words that get thrown around without true meaning. I learned that they are all different sides of the same coin and inextricably linked. To build a brand is to be customer centric, but you can’t just meet customer needs; you must actually anticipate and exceed them.

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FOX Business: What’s the first thing you do when you wake up in the a.m.?

Drori: My sons are 2 and 4-years-old, and they’re basically roosters. They wake me and my husband up by 6 a.m. every day so the first thing I do is give them a big kiss. The second is check Slack.

FOX Business: What advice do you have to entrepreneurs starting their own businesses?

Drori:  Speak to your customers.  Just pick up the phone, reach out on social media, and use the tools at your disposal to begin having authentic two-way conversations. Then, hold up your end of the deal and put feedback into action to build trust with your community.

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